Tag Archives: Presumption of Execution Immunity

Republic of Argentina v. NML Capital, Ltd.: Reaction to Argentina’s Reply Brief

April 15, 2014 By in Discovery, Uncategorized Tags: , , , , , , , , , , Leave a comment

I only have time for a short post today, but — especially in light of my article about the NML case last week (“NML Article”) — I wanted to share my thoughts about the reply brief filed by Argentina yesterday.

Argentina repeats its claim that “the FSIA make all foreign-state property presumptively immune from judgment execution.”  Reply Brief for Petitioner (“Arg. Reply”) at 3 (emphasis added); see also id. at 14.  As I explained in my article, Argentina’s contention is untenable given the plain language of the FSIA.  NML Article at 5-9.  Section 1609, the statutory provision that confers presumptive execution immunity on a foreign state’s property, is expressly limited to property “in the United States.”  28 U.S.C. § 1609 (emphasis added).  Contrary to Argentina’s argument, nothing in the FSIA confers presumptive immunity upon foreign state property throughout the world. 

Argentina’s response to section 1609’s clear limitation appears to be relegated to a footnote in the middle of its brief, where it states the following: “NML is wrong that foreign-state property outside the United States is not ‘immune,’ but in any event does not dispute that U.S. courts may not execute on such property, and acknowledged as much to the Second Circuit.”  Arg. Reply at 10 n.4 (emphasis in original) (citations omitted).  The fact that Argentina did not even repeat the full argument it made to the Second Circuit on the issue does not, in my opinion, bode well for its position in the Supreme Court.  Cf. NML Article at 7-8.  Moreover, as I stated last week, section 1609’s “in the United States” limitation means that it “neither provides immunity to foreign property nor empowers U.S. courts to order execution against assets held abroad.”  NML Article at 8.  That the FSIA fails to accord United States courts with the power to execute upon property located in foreign jurisdictions does not mean that such property receives “presumptive immunity” under the statute.  Instead — and as Argentina has previously conceded in this litigation — the status of foreign state property overseas is simply a matter of foreign law properly resolved by foreign courts.  Cf. NML Article at 7-8.

Argentina also appears to argue that the pre-FSIA common law should govern with respect to a foreign state’s property overseas.  Arg. Reply at 4-5, 11.  But principles of statutory construction — including those relating to adherence to pre-statutory common law — do not trump a statute’s plain language.  Cf. Sebelius v. Cloer, — U.S. —, 133 S. Ct. 1886, 1895-96 (2013).  Moreover, Argentina nowhere shows that the pre-FSIA regime accorded immunity to a foreign state’s property abroad.  In the absence of such a showing, it is just as likely that immunity issues relating to foreign property were treated as matters of foreign law before the FSIA’s enactment, just as they are now.

Finally, Argentina’s waiver argument (Arg. Reply at 20-23) — which disregards that the issue of waiver with respect to foreign assets is a question of foreign law — fails for the reasons I explained more fully in my article last week.  See NML Article at 10-11.

Republic of Argentina v. NML (No. 12-842) – Why Both Sides Are Wrong

April 11, 2014 By in Discovery Tags: , , , , , , , , , , , , , , , , , , Leave a comment

NML, a Cayman Islands hedge fund, obtained numerous federal judgments against Argentina arising out of Argentina’s default on payment of its public debt. Argentina refuses to satisfy any of the judgments. Because NML has had little success in finding Argentinian assets in the United States subject to execution under the Foreign Sovereign Immunities Act (FSIA), the district court granted NML broad discovery from non-party banks relating to Argentina’s assets overseas. The discovery dispute between NML and Argentina is currently pending in the United States Supreme Court, with oral argument scheduled for April 21, 2014.

The FSIA has been called a “statutory labyrinth” with “many deliberately vague provisions.” While that characterization may hold true regarding certain sections of the FSIA, the statute is a model of clarity and simplicity with respect to the threshold issue in this case: whether foreign assets are accorded a statutory presumption of immunity from execution. Section 1609 provides that only a foreign state’s property “in the United States” is presumptively immune from execution. Nowhere does the FSIA confer presumptive immunity on a foreign state’s assets held outside the United States.

Notwithstanding section 1609’s plain language, the central contention advanced in the Supreme Court by Argentina and the United States (as amicus) is that Argentina’s assets overseas are entitled to presumptive statutory immunity and, as a result, are immune from discovery under the FSIA. Because Argentina and the United States’ argument cannot be squared with section 1609 itself, it is wrong as a matter of law.

Since the FSIA does not accord presumptive sovereign immunity upon a foreign state’s assets overseas, the discovery dispute between Argentina and NML should not be analyzed under the FSIA. Instead, the Supreme Court’s decision in Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. 522 (1987), controls. The district court and the Second Circuit should have reviewed NML’s discovery requests under the comity analysis set forth in Société Nationale, which is broad enough to accommodate all of the interests and policy considerations raised by the parties and the United States.

With regard to NML’s main argument in the Supreme Court, NML fails to recognize the protections afforded by immunity under United States law. NML contends that because the text of the FSIA does not mention “discovery,” the FSIA does not limit the discovery available to plaintiffs in post-judgment proceedings. With respect to domestic assets, NML’s contention is contrary to settled law. Under Supreme Court and circuit precedent, protection from discovery inheres in the very concept of immunity itself. Moreover, with regard to foreign assets, NML does not undertake the comity analysis required under the Supreme Court’s decision in Société Nationale.

In the end, while the discovery dispute between NML and Argentina may be of critical importance to the parties, this case does not belong in the Supreme Court. There is no circuit split with regard to the threshold issue, namely whether foreign assets are protected from execution under the FSIA. Instead, the NML case simply involves the lower courts’ erroneous failure to apply the Société Nationale comity analysis to NML’s discovery requests targeting Argentina’s assets overseas. To avoid issuing an unnecessary decision in the sensitive area of foreign sovereign immunity law, the Supreme Court should consider remanding the matter with instructions to analyze the requested discovery under Société Nationale.

Read the full article via the PDF version below: